If the credit risk of a foreign borrower is good, then the sovereign country risk is irrelevant.

Question

Quizplus · Accepted Answer

Sovereign country risk refers to the risk associated with the borrower's home country, including political stability, economic conditions, and regulatory environment. Even if a foreign borrower has good credit risk, the country risk can still affect their ability to repay the loan, and therefore should be taken into consideration.

If the Credit Risk of a Foreign Borrower Is Good